Thai rice prices are back around a three-year-high due to speculation ahead of a new government intervention scheme that will offer farmers sharply higher prices, dragging markets elsewhere in the region up, too, traders said on Wednesday.
The benchmark 100 percent B grade white rice was offered at $650 a tonne, compared with last week's $620-$660 a tonne, they said, although there was little trade. The price hit $640 a tonne in early September before dipping slightly.
It has now risen around 30 percent since the end of May, due mostly to hoarding ahead of the new intervention scheme, which has limited supply. "It's pure speculation that is pushing prices up, not demand, as demand is very thin right now," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
The Thai government will start buying paddy from farmers at 15,000 Thai baht ($482) a tonne on Friday, an intervention level that could push export prices up to $850-$870 a tonne and, some exporters fear, could force buyers to switch to Vietnam. "Offers for Thai rice prices could gradually rise higher and higher, to a level that becomes unacceptable to the market, and then buyers will turn to Vietnam and we could see a sharp drop in exports early next year," said one Bangkok-based trader.
Thailand, the world's biggest rice exporter, expects to sell a record 10 million tonnes of rice this year, thanks to hefty exports in the first half. In Vietnam, the second-biggest shipper, the Agriculture Ministry says its exports could reach a record 7.5 million tonnes. Prices in Vietnam were also higher this week, largely due to loading demand and limited supply caused by flooding, exporters said.
Indonesia's state procurement agency, Bulog, bought 400,000 tonnes of 15 percent broken rice at $580 a tonne, cost and freight, in a government deal last month for shipment in the last three months of 2011, US traders said. "Prices have been rising as exporters seek rice for loading under the 400,000 tonne deal," one trader said. The 5 percent broken rice rose to $575-$580 a tonne, free on board, from $565-$575 last Wednesday.
Prices last touched $580 a tonne, a year high, on September 7 and August 24. That is also the highest since $600 on September 10, 2008. The 25 percent broken rice rose to $520 from $515-$520 a tonne a week ago, traders said. Floods in the Mekong Delta have prompted some rice mills to shut temporarily, contributing to tight supply after the summer-autumn rice harvest ended, traders said. The crop, the second-biggest of the Delta's three crops each year, yielded 9.06 million tonnes, up from 8.01 million tonnes in 2010, industry reports showed.
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